Wednesday, December 28, 2011

Tomgram: Steve Fraser, “De-Fault Is Ours”Change a single letter in what is and, lo and behold, you get what if.Here’s just a taste of what is:

Foreclosures on houses with delinquent mortgages have doubled since 2010, with housing prices expected to drop another 10% before stabilizing. Meanwhile, the executives of government-backed mortgage giants Fannie Mae and Freddie Mac, institutions bailed out by taxpayers to the tune of $169 billion, are offering next to no significant relief to mortgage-holders in trouble. For such “work,” the top six executives of the two outfits raked in “$35 million in compensation, including millions in bonuses.”

One in every three Americans is now considered either poor or “near poor,” according to recent census data; that is, 49.1 million Americans are below the poverty line and another 51 million perilously close to it. This, of course, represents a significant increase in downward mobility. According to the New York Times, “over half of the near poor in the new tally actually fell into that group from higher income levels as their resources were sapped by medical expenses, taxes, work-related costs and other unavoidable outlays.”

On the upward mobility front, the news has been anything but upbeat. Recent evidence indicates that, if upward mobility happens to be your urge, you better move to Canada — or to “aristocratic” Europe, where they still have it (though for how long, given the Euro crisis, is anyone’s guess). One thing is clear: given what’s happening to American education, the next generation’s fate is likely to range from immobility to downward mobility. The average graduate who takes out loans to pay for college now emerges from his or her subprime education with a debt burden of more than $25,000 dollars, a figure growing by the year. Meanwhile, at state colleges, once the portals to an upward-mobile future, students are paying ever more for ever less educationally as tuitions rise and state support shrinks.

As for wealth in this country, from 2005 to 2009, median wealth among Hispanics fell 66% to $6,235, among African-Americans, 53% to $5,677, and among whites, 16%, to $113,149. These figures represent the largest wealth disparities in the quarter century the Census Bureau has been collecting data on the subject. As for income, between 1979 and 2007, according to a recent report from the Congressional Budget Office, the after-tax earnings of the top 1% of Americans grew by 275%, while those of the bottom 20% rose by only 18%. Meanwhile, American corporations are sitting on “record amounts of cash,” even as job-creation has been next to nil, capital investment in new plants and infrastructure stagnates, and companies are happy to invest their multibillions instead in stock-buyback deals.

Here’s the financial overview: the top 1% of Americans now take in more than 25% of the nation’s income and control at least 40% of its wealth. (A quarter of a century ago, the figures were 12% and 33%.) To make it into that top 1%, according to economist Emmanuel Saez, your family needs to make a minimum of $368,238 a year (based on 2008 income figures); for the 15,000 families that make up the top .01%, average annual income is $27,342,212.

In other words, if you aren’t in the top 1% right now, it’s all what is, and never what if — no dreams allowed.

When it comes to what is, the news is terrible. When it comes to what if, who knows? TomDispatch regular Steve Fraser, our preeminent historian of Wall Street and author of Wall Street: America’s Dream Palace and Every Man a Speculator: A History of Wall Street in American Life, offers his own ideas about how, here in the U.S. of A., what is might be challenged and turned back into what if? Tom